Tenants, Investors Seek Sustainable Office Buildings — How Does Your Market Stack Up?

Sustainability is an important part of commercial real estate development, as developers, landlords and tenants want buildings with the latest in smart and eco-friendly materials as well as energy-saving technology.

With the increase in flexible working conditions, many tenants are weighing these characteristics when considering where to locate their offices.

But what are the top markets when it comes to meeting the demand for sustainable workspace? A 42Floors study found that nearly half of the top 10 markets are in Western states, but Washington, D.C. topped the list of the 10 Most Eco-Friendly Office Markets.

The 42Floors study ranked the markets based on eight metrics that analyze buildings and their surrounding environments: certifications, energy efficiency, materials, building policies, electric vehicle (EV) charging stations, public transit and walkability.

Washington, D.C., has the highest ratio of energy-efficient buildings with 90.5 square feet of Energy Star-graded properties per capita. It also had the third-highest LEED score on the list, just behind San Francisco and Chicago.

San Francisco, where nearly one-quarter of office buildings are certified LEED Platinum, landed in the No. 2 spot.

As home to the highest number of EV charging stations per 100,000 residents, Atlanta ranked No. 3 on the list. Boston, which got the second-best score for its EV charging station ratio and percentage of people commuting using public transit or nonmotorized vehicles, claimed the fourth spot.

Seattle ranks fifth on the list, followed by Denver; Chicago; Oakland, California; Austin, Texas; and New York City.

More tenants and investors are looking for buildings that incorporate sustainability features that reduce energy consumption, according to a CBRE survey. More than half of the survey respondents are willing to pay a premium for buildings that have on-site renewable energy generation or smart technology that adjusts building operations to reduce environmental impact.

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Green building certification is one of the biggest factors that could positively impact a real estate transaction, with 79% of respondents to the CBRE survey saying it has an impact on their real estate decisions and nearly half saying they would pay a premium for them.

Investors say they use the certifications to enhance their buildings’ brands and marketability to prospective tenants.

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